The Daily Forex report recently published an article by Caleb Garvin titled “Digital Wallets Vary By Country- PSI Pay Closes the Gap.” The article reveals the purpose of the digital wallet and how it came to be so popular with users. The digital wallet functions the same as a traditional leather wallet but it creates a greater convenience for people who are spending more online. They also have greater security than traditional wallets while allowing the customer to have a single mobile device instead of a number of cards or cash.
In Europe, many digital wallets are used to replace the cash balance. A key factor for the Europeans is the ability of the digital wallet to hold a number of different currencies, which can be incredibly beneficial if they go to different countries and don’t want to constantly exchange their money for the local currency. They might link the wallet to debit cards so they can withdraw money from ATMs or banks. However, they can also use the digital wallet to buy services or products from the balance. There are a number of different ways Europeans are depositing money into digital wallets. Sometimes they simply transfer the money from traditional banks and checking accounts. However, a growing trend is to use cryptocurrency to fund the wallet. This allows them to use cryptocurrency in shops or restaurants. Some people are also charging the deposit to their credit cards.
European digital wallets can replace a traditional bank account though they do not have all of the same benefits of a traditional bank account. Many companies and individuals have decided to close their traditional bank account and only use the digital wallet to conduct their business or typical spending. Many benefit from this strategy if they live in a place where many businesses accept mobile payments.
The article suggests that it is important for consumers to be wary of carrying large balances on their digital wallet. Though governments will often insure traditional banks and standard bank accounts, they do not provide protection for electronic money. However, the Federal Deposit Insurance Corporation covers some digital products like the Google Wallet. Some digital companies like Venmo and PayPal do not have their electronic funds insured.
The European Union has not created an insurance program for the money deposited into mobile wallets. The providers need to keep cash or funds in a secured bank account to protect their funds. Digital Wallets also can’t pay interest to their customers. However, banks have a low-interest accumulation which makes this drawback almost non-existent.